The Oil Industry as an Oligopoly in the United StatesOligopolyThe oligopoly market consists of a few relatively large companies that have sufficient market power and recognize their interdependence. Every company knows that its choice of actions or changes in its results will have an effect on other companies and that in response to the change, other companies will take corresponding actions to adjust and therefore affect their sales and their income. (Thomas 428) To define precisely, the characteristics of oligopoly consist of (a) a few large, dominant firms; (b) a standardized or differentiated product or services; (c) the firm's pricing and production decisions affect the demand and marginal revenue of other firms in the market and vice versa; and (d) the entry barriers to becoming a dominant firm consist of substantial involvement in terms of technology and economic conditions. With these characteristics, there are usually between two and up to ten companies that hold significant market shares in a particular sector. According to the United States Energy Information Administration website (eia.gov), a crude oil refinery is identified as a collection of numerous industrial facilities that process crude oil into petroleum in the form of finished products. Oil and petroleum are used interchangeably. This article focuses on the petroleum industry, limited to crude oil and refineries. US-based companies are identified as an oligopoly in the US market due to their market share and powers. Dominant Companies The oil and gas industry in general is dominated. by a few large companies, it is therefore defined as operating in an oligopolistic market. Through acquisitions in the industry, the four largest oil companies in the United States control market power. ExxonMobil, Chevron, ConocoPhillips and Marathon Oil d...... middle of paper ......in 2012, the company announced that it would spend $5.2 billion in 2013 on modernization and exploration equipment and facilities. Shortly thereafter, ConocoPhillips recreated its portfolio by creating two public trading companies with different business strategies. In 2012, ConocoPhillips announced that it would focus on upstream activities while Phillips 66 is moving towards midstream and downstream activities. The Phillips 66 Company engages in the production side of the house, such as refining, marketing and chemical production, leaving ConocoPhillips to focus entirely on research, development and inventions. (Schaefer)Vertical integration. Delta Air Lines, which had no refining assets, purchased a refinery from ConocoPhillips and now produces jet fuel for its planes as well as other petroleum products that it does not consume. http://www.eia.gov/todayinenergy/detail.cfm?id=14791